Analysts puzzled as Idion share plunges

By Iain Scott for Idion Technology Holdings

Johannesburg, 03 Jul 2002

Idion`s annual general meeting (AGM) tomorrow is not expected to be a pedestrian affair, with DataMirror representatives unlikely to be silent.

Canadian company DataMirror`s offer to buy Idion shares at 180c each also closes tomorrow. Following its hostile takeover bid aimed at gaining control of Idion`s US arm, Vision Solutions, DataMirror has managed to garner a 36.9% stake, making it the largest shareholder.

DataMirror CEO Nigel Stokes has been highly critical of Idion`s management and the company`s financial performance and analysts say DataMirror is not likely to be quiet at the AGM.

The Idion share price closed 10c down at 170c on the JSE yesterday, after plunging to 140c during the day`s trade.

Volumes were not significant, with just 37 950 shares changing hands. However, the move has baffled analysts, who say it makes no sense to sell at such a low price when DataMirror`s offer of 180c is still open.

DataMirror says it was not active in the market yesterday, which means it did not buy or sell the shares, and Idion is in a closed period, barring it from trading.

"There are not too many buyers in the market if you look at the bids right now, but maybe someone was desperate to have money quickly or even didn`t realise DataMirror`s offer was still open," one analyst said.

"It sounds silly, but these things do happen. But I think 180c is not a bad price."

He says the share price will probably fall significantly after tomorrow, particularly if DataMirror decides to sell its 36.9% shareholding, which he believes is likely.

"They must be pretty irritated now. It`s not their intention just to hold a strategic stake - they want to have control of Vision." He adds that he does not think Idion can deliver on all its promises.

Another analyst, who says he also finds the share price movement "odd", suggests that the sellers were short-term investors who panicked as a result of losses on the Nasdaq and sold at a level with which they were satisfied.

Idion corporate communications director Corn'e Arnold says Idion`s policy is not to comment on share price movements unless they are connected with a company announcement.

However, she says she is aware that DataMirror was not involved. "And it definitely wasn`t us. We`re in a closed period because of our interim results."

The share was untraded at 170c late this morning.